Energy and resources

Analysis

2020 Energy, Resources, and Industrials Industry Outlooks

A midyear update on sector trends and the impact of COVID-19

How have the trends we outlined in late 2019 played out in 2020? Since the COVID-19 pandemic, what emerging trends are on the horizon? Our industry outlook collection, covering Oil, Gas & Chemicals; Power & Utilities; and Industrial Products & Construction, evaluates sector landscapes to help executives better plan for success and unforeseen challenges.

COVID-19 and the impact on the industry

Demand destruction and supply chain disruption are expected to continue to impact the energy, resources, and industrials sectors for the remainder for 2020. In addition, new investment could slow as companies maintain a holding pattern until the macroeconomic outlook is clearer. However, the pandemic and economic downturn have focused many companies on new opportunities for adoption of digital technologies and defining the future of work. Meanwhile, the longer-term commitment to addressing carbon emissions and the energy transition is unlikely to be reversed, although companies will likely focus on balancing short- and long-term priorities in the face of the current crisis.

At the end of 2019, we produced our annual outlook collection for the energy, resources, and industrials industry. Given the disruption and impact caused by COVID-19, we’ve evaluated the key trends, challenges, and opportunities that may affect your business and influence your strategy for the remainder of 2020. Check out our midyear trends:

Pre-COVID-19 impact

2020 Energy, Resources, and Industrials Industry Outlooks
(published November/December 2019)

Headwinds, tailwinds, or sidewinds—stay alert to recognize opportunity amidst heightened uncertainty

Heightened risk of economic slowdown, linked to ongoing trade tensions and reduced confidence, will potentially impact all energy, resources, and industrials sectors in 2020. This could lead to a slowdown in demand growth, both for energy and manufactured goods. In addition, new investment could slow down with companies maintaining a holding pattern until the macroeconomic outlook is clearer. The engineering and construction sector is in the front line to see the effect of this.

On the other hand, areas of opportunity are always present. In defense, governments around the world are raising spending on security and military equipment as actual or perceived security risk factors become more salient. In the manufacturing industry, accelerated digitized factory automation looks set to give a welcome boost to productivity as smart factories proliferate. In electric power, renewal of aging infrastructure, a pivot to low-carbon or renewable generation, and an enhanced focus on system and grid resilience should drive continued high levels of investment. In the oil and gas industry, US LNG is in expansion mode, while growing US oil production is playing an important role in enhancing global supply security.

Let us not forget that more deep-rooted, longer-term trends are in play and will likely strengthen in 2020. Sustainability and carbon mitigation are becoming increasingly central to investment and operational strategies across all sectors in energy, resources, and industrials, along with a heightened imperative to communicate progress in these areas to customers, investors, and other stakeholders. Digitization is becoming more pervasive and can open up new avenues to productivity and profitability. And in every sector, the voice of customers is increasingly driving business models.

Look again

In today’s rapidly evolving marketplace environment, key business issues are converging with impacts felt across multiple industry sectors. What are the key trends, challenges, and opportunities that may affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward thinkers.

Discover more Industry Outlooks.

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